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January 22, 2007

IHA/AHA Oppose CMS Rule to Cut Medicaid

The Illinois Hospital Association joins the American Hospital Association in strongly opposing a proposed rule to cut Medicaid, recently released by the Centers for Medicare and Medicaid Services (CMS). The proposal would have a potentially devastating effect on critical safety net services, hurting health care for millions of children, poor, disabled and elderly people in Illinois and across the nation. The proposed regulation, published in the Jan. 18 Federal Register, has a 60-day comment period.

Despite opposition in 2006 from 55 senators and 300 Representatives to the Administration-proposed Medicaid cuts, CMS last week published the proposed rule that would limit Medicaid payments to public hospitals to cost and narrow the definition of government provider. Estimates are that the proposed rule would cut Medicaid funding nationally by $120 million the first year and $3.87 billion over five years. Neither the House nor Senate included Medicaid cuts in their 2007 budget resolutions. In addition, prior to adjournment, the 109^th Congress blocked a separate part of the Administration’s original proposal to restrict Medicaid spending by passing legislation that set the maximum provider tax rate at 5.5 percent for 5 years. The Administration’s plan was to cap it at 3 percent.

Under the newly proposed rule, public health care providers would receive Medicaid reimbursements limited to the actual cost of their services, limiting their ability to subsidize other health care purposes through such mechanisms as upper payment limits and intergovernmental transfers.

IHA joins the American Hospital Association in urging Congress to block implementation of the proposed rule. IHA agrees that changes are needed. However, they should be part of a measured and cautious approach to reforming the system that includes congressional deliberation and dialogue among all stakeholders, and ensures that government fulfills its duty to help care for those most in need.